Trailers R Us Company, which uses an activity-based costing system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic data: Total budgeted setup costs for the year are $161,400.
If the setup costs are allocated using direct labor hours, how much of the total setup costs would be allocated to boat trailers?
A)$161,400
B)$114,861
C)$226,795
D)$398,349

Question

Trailers R Us Company, which uses an activity-based costing system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic data:  Total budgeted setup costs for the year are $161,400.
If the setup costs are allocated using direct labor hours, how much of the total setup costs would be allocated to boat trailers?
A)$161,400 
B)$114,861 
C)$226,795 
D)$398,349

Quizplus · Accepted Answer

The question asks for the amount of setup costs allocated to boat trailers using direct labor hours. However, there is no information given about the total number of direct labor hours for each product. Therefore, we cannot determine the answer to this question with the given information. The setup costs can only be allocated based on direct labor hours if we know the total direct labor hours for each product, which is not provided.

Trailers R Us Company, Which Uses an Activity-Based Costing System